Quarterly contributions

[FAPInJax]

Now that we have regulations and know all the answers <GGG>.

A client is well funded (AFTAP > 80%) and therefore can elect to use the credit balance / pre-funding balance.

Are all contributions ignored for purposes of the quarterlies until the balances are used up? For example calendar year plan and client makes a contribution 4/1. The credit balance would naturally cover the first quarterly. Is the credit balance used and the contribution justs gets adjusted (and used to offset future quarterlies if necessary).

Once the client makes the election to use the balances are they locked in?

Is this another 'consulting' opportunity to advise the client the options of using / not using the balances?

[JAY21]

Software spoils us so I haven't given this a lot of thought, but I don't think I've seen anything yet in post PPA guidance that changes the mechanics of the application of the CB, so I think the approach I've always understood was you apply any actual contributions first to the quarterly requirements and keep carrying forward the Credit Balance (with interest I believe) to subsequent quarterly dates until there is a contribution deficiency for a given quarter and at that point apply the CB to cover some/all of the quarterly requirement. Seems like this was in an old IRS Notice if I recall correctly.

I don't believe there is any particular election required or even available for this to my knowledge.

I could see this being an issue that might beg another IRS Notice at some point if the service doesn't think old guidance is sufficient given PPA changes. However, I'm not sure it's needed on this point myself, except maybe the interest on the CB would need to conform to new interest crediting rules on Credit Balances.